Chapter 11 - Quiz Questions

Who pays the federal unemployment tax and the state unemployment tax? Congress appropriates money to pay these taxes. State governments appropriate money to pay these taxes. Employees pay both taxes. Employers pay both taxes for employees.

Employers pay both taxes for employees.

Which of the following taxes is both reported on Form 941 and solely withheld from employee earnings (therefore not paid by the employer)? Social security tax Federal income tax Medicare tax Federal unemployment tax

Federal income tax

The federal unemployment taxes are reported on: Form 941. Form 8109. Form W-3. Form 940.

Form 940.

How does a favorable experience rating affect the state unemployment tax rate? It will likely reduce the SUTA amount due. It makes the FUTA tax less. It will make the FUTA tax more. It will make state Medicare tax withheld more on employees.

It will likely reduce the SUTA amount due.

If an employer does not deduct enough taxes from an employee's earnings, the business pays the difference when filing Form 941. This deficiency is then reported within which account in the journal? Payroll Taxes Expense Social Security Tax Payable Employee Income Tax Payable Workers' Compensation Insurance Expense

Payroll Taxes Expense

What account is debited when an estimated workers' compensation insurance payment is made by an employer at the beginning of the year? Cash Workers' Compensation Insurance Expense Prepaid Workers' Compensation Insurance Workers' Compensation Insurance Payable

Prepaid Workers' Compensation Insurance

Why is it important for workers' compensation wages to be classified according to the type of work performed? The company will likely pay a different rate on each classification. Some classifications are exempt from workers' compensation rates. Federal law requires classification. The wages must be reported by classifications on Form 941.

The company will likely pay a different rate on each classification.

How does a business deposit federal payroll taxes? Employees deposit their own taxes due at a bank. The company makes the deposit at any bank. The company makes the deposit using bitcoin. The deposit is made at a national bank by the company.

The deposit is made at a national bank by the company.

Which of the following statements is not correct? The federal government allows a credit, or reduction, in the federal unemployment tax for amounts charged by the state for unemployment taxes. The normal federal unemployment tax rate of 0.6% (or 6.0% less the state unemployment tax credit of 5.4%) changes if favorable experience ratings change the state unemployment tax rate. The earnings limits for the federal and the state unemployment tax are usually the same, $7,000. Under the experience rating system, the state tax rate may be reduced to less than 1 percent for businesses that provide steady employment. In contrast, some states levy penalty rates as high as 10 percent for employers with poor records of providing steady employment.

The normal federal unemployment tax rate of 0.6% (or 6.0% less the state unemployment tax credit of 5.4%) changes if favorable experience ratings change the state unemployment tax rate.

What is the purpose of Form 941? account for all employee gross wages and federal tax-required withholdings during a quarter used to calculate the federal unemployment tax due for a quarter reports the yearly amounts of gross wages and required federal tax withholdings used to calculate the state unemployment tax due for a quarter

account for all employee gross wages and federal tax-required withholdings during a quarter

All of the following are internal control procedures that are recommended to protect payroll operations except: make voluntary deductions from employee earnings based only on a signed authorization from the employee. keep payroll records in locked files. retain all Forms W-4 assign new employees to work in payroll operations.

assign new employees to work in payroll operations.

The entry to record a deposit of federal income taxes withheld and social security and Medicare taxes owed would include a: debit to an expense account and credit to one or more liability accounts. debit to an asset account and credit to an expense account. debit to one or more liability accounts and credit to an asset account. debit to one or more expense accounts and credit to one or more liability accounts.

debit to one or more liability accounts and credit to an asset account.

Employees' payments for federal income taxes withheld and social security and Medicare taxes are periodically: sent directly to the Internal Revenue Service. deposited in a special-purpose bank account, controlled by the company, until year-end when the funds are sent to the U.S. Treasury Department. sent to the local office of the Internal Revenue Service. deposited in a government-authorized financial institution.

deposited in a government-authorized financial institution.

Employers usually record social security taxes in the accounting records at the end of: each payroll period. each month. each quarter. the year.

each payroll period.

Given the following scenario, choose the best answer. At the end of the quarter, the business owed $2,000 in total payroll taxes. The amount due must be deposited: on the last business day of the quarter. on the last day of the quarter. on the day the Form 941 for the quarter is due. Correct on the first day of the next quarter.

on the day the Form 941 for the quarter is due. Correct

State unemployment taxes are filed: monthly quarterly yearly at the end of each pay period

quarterly

Both the employer and the employee are responsible for paying: social security, Medicare, and FUTA taxes. FUTA taxes. SUTA taxes. social security and Medicare taxes.

social security and Medicare taxes.

Which tax is paid equally by the employee and employer? federal income tax state income tax social security tax federal unemployment tax

social security tax

Assuming that tax is owed when filing the form, what is the due date for Form 941? the last day of the month following the end of each calendar quarter ten days after the end of each calendar quarter five days after the end of each calendar quarter the last day of the next calendar quarter

the last day of the month following the end of each calendar quarter

Which of the following is not a destination where an employer might send Form W-2? the Social Security Administration the workers' compensation insurance provider the employee the state tax department

the workers' compensation insurance provider

The Form W-2 is used to report all but the following: gross earnings for the year. total federal income tax withheld from employee earnings for year. total payroll taxes the company paid this year. total Medicare tax withheld from employee earnings for year.

total payroll taxes the company paid this year.

Under what circumstance would an employer be subject to the semiweekly deposit schedule rule? total taxes reported during the lookback period exceed $50,000 total taxes reported during the lookback period are below $50,000 total number of employees exceeds 250 total number of employees is below 250

total taxes reported during the lookback period exceed $50,000